How to Buy Commercial Property in Malaysia

Friday, December 01, 2017

Assalamualaikum and Hye!!

How to Buy Commercial Property in Malaysia | So, are you guys planning to buy a commercial property in Malaysia? But wait, what is actually a commercial building refers to?  A commercial property typically refers to retail buildings, office buildings, warehouses, industrial buildings, apartment buildings and mixed building where it can be a mixture of retail, office or apartment. 

So today I'm very proud to share with you all few important steps and the process of buying a commercial property in Malaysia. You could also use a Malaysia’s loan calculator to calculate whether you are able to afford purchasing a commercial property or not. But very important to check your CCRIS report also.

First of all, you will need to plan your budget and costs for the loan documents. Due to the skyrocket high price of commercial properties in the market, people nowadays have the misconception that investment in commercial property is meant for the rich only. There are actually commercial properties in the market that are affordable too. You can also read the advantagesand disadvantages of investing in a commercial property in Malaysia.

However, PLEASE NOTE that there will be some differences when it comes to bills as compared to buying residential properties, such as:

Utility bills
It is commonly known that utility bills for commercial properties to be higher than residential properties, and it can be as high as 30% more than the utility bills for residential properties.

Quit rent
Quit rent is charge on a once a year basis and it is typically 2.5 times higher than the quit rent charges for residential properties.

Internet rates
Malaysia’s Internet provider, TM Net is charging twice the price for commercial properties as compared to normal residential properties. The current package for residential properties is only RM168.00 per month, whereas the Internet package for commercial package is RM295.00 per month.

Astro packages
Astro packages are applying the same policy as the Internet rates, where it charges commercial properties twice the rate of commercial properties.

Assessment fees
An assessment fee is charged twice a year and is typically around 2.5 times higher than residential properties.

Other than the differences above, the rest are pretty much the same as buying a residential property. I've gone through this process. I'll share with you guys later okayh. However, there are still some of the charges that buyers will need to take into account when it comes to purchasing commercial properties, such as:

1. Down payment
Do bear in mind that you will need to fork out a big initial capital as compared to residential property for 2 reasons: commercial properties are more expensive and lower loan financing from the bank. The maximum loan approved by bank will only be 80%. That being said, you will need to pay the 20% down payment on your own.

In addition, you are unable to withdraw money from your EPF Account II to pay for your commercial property.

2. Valuation fees and costs
The valuation fees are greatly dependent on whether the property is a new or a sub-sale development. Let us say if the commercial property is a new property, the valuation fees will then be borne by the developer, whereas if it is a sub-sale commercial property, the buyer will then be the one to pay for the valuation cost, based on the price of property.

3. Real estate agent’s fees
Real estate agent’s fee will only be applicable for the sub-sale market, where the owner or seller of the commercial property pays a 2% to 3% real estate agent’s fees, according to the property purchase price.

4. Sales and Purchase Agreement fees
The Sales and Purchase Agreement fees are proof of purchase for the property that you have purchased. Good news is that the price for the Sales and Purchase Agreement fees are the same as purchasing residential properties, where there is a price tier according to the price of the property.

5. Memorandum of Transfer
The Memorandum of Transfer (MOT) fees will be the final fees to be paid by buyers upon the completion of development. These fees are for the ownership transfer of property to the home buyer, also known as the rightful owner, and will only start to be transferred around 6 months after the development’s completion. These fees too, are charged according to a price tier based on the price of the property, along with 6% government tax and a RM1,000 - RM1,500 disbursement fee.

6. Loan agreement and legal fees
After that, property buyer will then need to pay for Legal fees. These fees are charged depending on the time and expertise of the engaged lawyer, and also the price of your property. There is also a 0.5% stamp duty charge on the legal fees.

7. Miscellaneous costs
Lastly, the miscellaneous costs which are approximately the same as purchasing a residential property:
a) Mortgage Reducing Term Assurance (MRTA) / Mortgage Level Term Assurance (MLTA)
b) Fire insurance
c) Loan installment
d) Interest (The first thing I do survey ok since this is gonna be a long term payment that will incurred high cost if the interest is too high)
e) Utilities deposit
f) Renovation costs

So I think those are few process that you will need to consider before purchasing a commercial property. Lastly, commercial property in Malaysia can be a good investment option as well as commercial properties can offer a more rewarding income but with more risks. 

In addition, the price of commercial properties can increase by doublein a short time. Whetheror not to invest in commercial properties in Malaysia is depending on your property investment portfolio and how much risk you are willing to take. Make sure you weigh the pros and cons to make the best real estate investment decision that is suitable for you. 

Not to forget also please ensure to look out for essential factors such as the property type, location and your economic conditions before you decide to make such investment. You certainly do not want to end up regretting in the future because of the wrong choice that you have made. After all, buying property involves a huge sum of money. Plan carefully to avoid getting into financial problems.

So, wish you all the best guys!


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